LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 7, 1999 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB2372 by Gutierrez (relating to exempting certain drugs and medicines from the sales tax), As Introduced ************************************************************************** * Estimated Two-Year Net Impact to General Revenue Related Fundsfor * * HB2372, As Introduced: negative impact of $(225,921,000) through * * the biennium ending August 31, 2001. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $(99,468,000) * * 2001 (126,453,000) * * 2002 (134,295,000) * * 2003 (142,499,000) * * 2004 (150,966,000) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Revenue Revenue Revenue Revenue * * Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to * * General Revenue Cities Transit Counties * * Fund Authorities * * 0001 * * 2000 $(99,468,000) $(15,614,000) $(6,131,000) $(1,891,000) * * 2001 (126,453,000) (22,056,000) (8,661,000) (2,671,000) * * 2002 (134,295,000) (23,424,000) (9,198,000) (2,836,000) * * 2003 (142,499,000) (24,855,000) (9,760,000) (3,010,000) * * 2004 (150,966,000) (26,331,000) (10,340,000) (3,188,000) * *************************************************************************** Fiscal Analysis The bill would amend the Tax Code to exempt non-prescription medicines from the sales tax. Methodology The fiscal implications of the bill were estimated using data obtained from the Census Bureau. Sales of items in Texas were multiplied by the state sales tax rate, extrapolated through fiscal 2004, and adjusted for an assumed October 1, 1999 effective date. The fiscal implications for units of local government were estimated proportionally. Note: Not included in the fiscal impact of exempting non-prescription medicines are items that are available without a prescription but that are not primarily intended for medicinal use. Such items include deodorants, hair care products, shaving cream, and other similar products. Local Government Impact Local units of government would have a corresponding fiscal impact from sales tax revenues, as indicated in the table above. Source Agencies: LBB Staff: JK, BB, SM